Title
Introduction of Ordinance Approving a Lease and Authorizing the City Manager to Execute Documents Necessary to Implement the Terms of a Lease with Saildrone, Inc. a Delaware Corporation, for a Five-Year Lease with Two Five-Year Extension Options and a Right of First Negotiation for the Purchase of Building 12 Located at 1050 West Tower Avenue at Alameda Point. [In accordance with the California Environmental Quality Act (CEQA), this project is Categorically Exempt under the CEQA Guidelines Section 15301(c) - Existing Facilities.] [Requires Four Affirmative Votes] (Base Reuse 819099).
Body
To: Honorable Mayor and Members of the City Council
From: Jill Keimach, City Manager
Re: Introduction of Ordinance Approving a Lease and Authorizing the City Manager to Execute Documents Necessary to Implement the Terms of a Lease with Saildrone, Inc. a Delaware Corporation, for a Five-Year Lease with Two Five-Year Extension Options and a Right of First Negotiation for the Purchase of Building 12, Located at 1050 West Tower Avenue at Alameda Point
BACKGROUND
Saildrone, Inc. (Saildrone) is a Delaware corporation that designs and manufacturers wind and solar powered autonomous vehicles, which are called Saildrones. These vehicles are used for cost-effective ocean data collection. Saildrone works with governments and private companies around the globe to provide new insights about weather forecasting, carbon cycling, global fishing, and the impacts climate change has on humanity.
Saildrone is currently operating out of Building 12 under a sublease with Artemis Racing (Artemis) since February 2016. They have been at Alameda Point in Building 400 since approximately 2012 and were previously called Photon Composites This new lease will replace their current sublease once the lease commences (estimated September 1, 2017).
DISCUSSION
Saildrone is a fast growing company. In 2016 they had 8 employees and as of June, 2017 have 30 employees. Saildrone forecasts that they will have up to 40 full time employees by the end of 2017 and around 100 full time employees in the near future. Competitive compensation packages are offered to attract the best local talent, and the types of positions Saildrone employs ranges from entry level manufacturing positions to high end software engineering positions. Saildrone is a well-capitalized company, is generating revenue, and has large multi-year contracts with customers such as the National Oceanic and Atmospheric Administration (NOAA), NASA, the U.S. Navy, and more.
Building 12 is located at 1050 West Tower Avenue at Alameda Point and is shown on Exhibit 1. The building consists of approximately 110,000 square feet of rentable space as depicted on Exhibit 2 and Saildrone currently occupies 44,000 square feet of the building per the above referenced sublease. They intend to continue using Building 12 for the design, production, and storage of their autonomous vehicles and general related office uses. Parking will also be made available to Saildrone and is illustrated on Exhibit 3. In addition to parking, Saildrone will be allowed to use a portion of Taxiway H for access to the Seaplane Lagoon for the purposes of launching and retrieving their autonomous vehicles. Taxiway H can be seen on Exhibit 4.
The proposed lease is for five years with two five-year options to renew and a right of first negotiation for purchase of Building 12. The first right of negotiation for purchase would only be applicable if the City elects to sell the building. Starting in month two the monthly base rent will begin at $60,000 per month. Saildrone will be required to provide a security deposit in the amount of $67,531. The new lease agreement contains the standard insurance, indemnity, assignment and termination clauses the City of Alameda requires in all its leases and is summarized below.
The following summarizes the major business terms of the lease agreement:
|
Terms |
Building 12 |
|
Square Footage |
110,000 |
|
Uses |
Engineering, research and development, manufacturing and assembly and related office use |
|
Length of Term |
5 years |
|
Extension Options |
Two options to extend the Term for periods of 60 months each |
|
Option |
Right of First Negotiation to Purchase if City elects to sell. |
|
Security Deposit |
$67,531 |
|
Monthly Base Rent |
$0 - $67,531 |
|
1 |
$-0-* |
|
2-12 |
$60,000 |
|
13-24 |
$61,800 |
|
25-36 |
$63,654 |
|
37-48 |
$65,564 |
|
49-60 |
$67,531 |
|
*subject to abatement pursuant to section 4.1 (b) of the lease |
Although Saildrone is currently operating out of Building 12 under a sublease with Artemis, this new lease is estimated to commence as the Artemis lease expires. Saildrone is in discussion with Artemis about the possibility of a sublease, which would allow Artemis to stay in their current portion of Building 12. If Artemis decides not to enter into a sublease with Saildrone, then Saildrone would have the option to either expand into the portion of Building 12 that Artemis would vacate or seek another subtenant. If Artemis vacates their portion of Building 12, Saildrone has indicated that they intend to occupy the entire building to increase manufacturing production capacity and progress toward the goal of producing 1,000 Saildrones on site. Any potential new subtenant would be subject to City approval.
FINANCIAL IMPACT
The monies from the lease will be deposited into the Base Reuse Lease Revenue Fund (Fund 858) and are limited to uses permitted under the Economic Development Conveyance Memorandum of Agreement with the United States Navy (Navy). Any monies from potential sales tax generated will be deposited to the General Fund.
ENVIRONMENTAL REVIEW
In accordance with the California Environmental Quality Act (CEQA), this project is Categorically Exempt under the CEQA Guidelines Section 15301(c) - Existing Facilities.
RECOMMENDATION
Approve a lease and authorize the City Manager to execute documents necessary to implement the terms of a lease with Saildrone, Inc. a Delaware Corporation, for five-years with two five-year extension options and a right of first negotiation for the purchase of Building 12, Located at 1050 West Tower Avenue at Alameda Point.
Respectfully submitted,
Jennifer Ott, Base Reuse Director
By,
Nanette Mocanu, Assistant Community Development Director
Financial Impact section reviewed,
Elena Adair, Finance Director
Exhibits:
1. Aerial Map of Premises
2. Premises
3. Parking Area
4. Taxiway H License Area
5. Lease